Investors love dividend stocks, especially the ultra-yield variety because they provide a significant income stream and offer massive total returns. Total return includes interest, capital gains, dividends, and distributions realized over time. In other words, the total return on an investment or a portfolio consists of income and stock appreciation.
Most dividend investors seek solid passive income streams of quality dividend stocks. Passive income is a steady stream of unearned income that doesn’t require active traditional work. Shared ideas for earning passive income include investments, real estate, or side hustles.
Ultra-yield dividend stocks are ideal for investors with a higher risk tolerance, as they can supercharge total return with any growth in the stock price. We screened our 24/7 Wall St. Ultra-Yield dividend stock research database, looking for the absolute best stocks yielding over 12%. Five hit our screens, and all are solid ideas now.
Why are we covering these stocks?
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Despite the rise in interest rates over the last two years, we still see persistent “sticky” inflation on many everyday items we all have to purchase. Those looking to enhance their earnings with passive income can benefit from stocks that pay ultra-yield dividends.
Alliance Resource Partners
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This company is a leader in the thermal coal business, offers solid diversity, and a massive 13.24% yield. Alliance Resource Partners L.P. (NASDAQ: ARLP) is a diversified natural resource company that produces and markets coal primarily to utilities and industrial users in the United States.
The company operates through four segments:
- Illinois Basin Coal Operations
- Appalachia Coal Operations
- Oil & Gas Royalties
- Coal Royalties
It produces a range of thermal and metallurgical coal with sulfur and heat contents.
The company operates seven underground mining complexes in:
- Illinois,
- Indiana,
- Kentucky,
- Maryland,
- Pennsylvania, and
- West Virginia.
In addition, it leases land and operates a coal loading terminal on the Ohio River at Mt. Vernon, Indiana, buys and resells coal, and owns mineral and royalty interests in approximately 1.5 million gross acres of oil and gas-producing regions, primarily in the Permian, Anadarko, and Williston Basins.
Further, the company offers various mining technology products and services, including:
- Data networks
- Communication and tracking systems
- Mining proximity detection systems
- Industrial collision avoidance systems
- Data and analytics software
Annaly Capital Management
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This stock is trading under $20, which gives aggressive investors a chance to load up on the shares and pays a whopping 13.63% dividend. Annaly Capital Management, Inc. (NYSE: NLY) is a diversified capital manager that engages in mortgage finance and corporate middle-market lending.
Annaly Capital Management, as a real estate investment trust (REIT), offers unique tax advantages and the potential for higher dividends. Its investment portfolio includes:
- Agency mortgage-backed securities
- Mortgage servicing rights
- Agency commercial mortgage-backed securities
- Non-agency residential mortgage assets
- Residential mortgage loans
- Credit risk transfer securities
- Corporate debts
- Commercial real estate investments
Arbor Realty Trust
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This company trades at a ridiculous 7.7 times estimated 2024 earnings and pays a massive 13.32% dividend. Arbor Realty Trust (NYSE: ABR) invests in a diversified portfolio of structured finance assets in the multifamily, single-family rental, and commercial real estate markets in the United States.
The company operates in two segments:
- Structured Business
- Agency Business.
Arbor Realty Trust primarily invests in:
- Bridge and mezzanine loans, including junior participating interests in first mortgages
- Preferred and direct equity and real estate-related joint ventures
- Real estate-related notes
- Various mortgage-related securities
The company offers:
- Bridge financing products to borrowers who seek short-term capital to be used in an acquisition of property;
- Financing by making preferred equity investments in entities that directly or indirectly own real property;
- Mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower’s equity in a transaction;
- Junior participation financing in the form of a junior participating interest in the senior debt and
- Financing products to borrowers seeking conventional, workforce, and affordable single-family housing.
Further, it underwrites, originates, sells, and services multifamily mortgage loans through conduit/commercial mortgage-backed securities programs.
Mach Natural Resources
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This late 2023 IPO trades below the initial price and pays a gigantic 14% dividend. Mach Natural Resources (NYSE: MNR) is an independent upstream oil and gas company focused on the acquisition, development, and production of oil, natural gas, and natural gas liquids reserves in the Anadarko Basin region of Western Oklahoma, Southern Kansas, and the panhandle of Texas.
The analysts at Raymond James noted that the company is led by Tom Ward, Co-Founder of Chesapeake Energy; Mach is another entrant into the E&P MLP space. MNR is a pure-play operator in the Anadarko Basin, leveraging its strong position (1 million net acres) to become the primary consolidator in the region.
Mach’s midstream position and lower base decline (~20%) allow the company to target a lower reinvestment rate (~30%) relative to the overall industry.
Service Properties Trust
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This net lease REIT pays a stunning 13.22% dividend, and offers huge upside potential. Service Properties Trust (NASDAQ: SVC) is a real estate investment trust with over $11 billion invested in two asset categories:
- Hotels
- Service-focused retail net lease properties.
As of December 31, 2023, SVC owned 221 hotels with over 37,000 guest rooms throughout the United States and in Puerto Rico and Canada, the majority of which are extended stay and select service.
As of December 31, 2023, SVC also owned 752 service-focused retail net lease properties totaling approximately 13.3 million square feet throughout the United States.
SVC is managed by The RMR Group (NASDAQ: RMR), a leading U.S. alternative asset management company with over $41 billion in assets under management as of December 31, 2023, and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate.
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